Department of Health and Social Care
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Early warning system to protect against care home failure

New measures, including financial checks on care providers, will for the first time protect people receiving care if their provider fails.

New measures, including financial checks on care providers, will for the first time protect people receiving care if their provider fails, Care and Support Minister Norman Lamb revealed recently. The first ever system of national oversight and co-ordination will give early warnings if a company is in trouble. The Care Quality Commission (CQC) will take on the responsibility of a tough system of checks on the largest care companies – including those that provide care in people’s own home as well as in care homes.

A consultation on this issue ended in March and this plan of action is supported by the majority of the responses received. It will mean that the CQC will have the power to:

  • require regular financial and relevant performance information

  • require the provider to develop and submit a ‘sustainability plan’ to manage any risk to the organisation’s on-going sustainability

  • commission an independent business review to help the provider to return to financial stability

  • require information from the provider to enable the CQC to support local authorities to manage a provider failure

A provider in financial trouble can be a predictor of poorer quality care. Identifying these issues at an early stage can play a role, alongside regular inspection and customer feedback, in helping to pick up and stamp out quality failures.

These powers will bring care in line with other services such as hospitals and holiday operators, who already have formal mechanisms for oversight of a company’s financial “health” at a national level, to protect customers.

Care and Support Minister, Norman Lamb said:

Everyone who receives care and support wants to know they will be protected if the company in charge of their care goes bust.

The fear and upset that the Southern Cross collapse caused to care home residents and families was unacceptable. This early warning system will bring reassurance to people in care and will allow action to be taken to ensure care continues if a provider fails.

The plans will produce a system of central oversight for the 50 - 60 largest and most difficult to replace care providers, normally ones which operate nationwide. In the event of a failure by one of these, the effect is felt in many parts of the country and it is unreasonable to expect individual local authorities to manage the situation.

Smaller providers regularly exit the market for various reasons and in those circumstances, local authorities will continue to be required to make sure that people are given the necessary support if they need to arrange alternative care.

CQC Chief Executive David Behan said:

These are important measures that provide early warning of potential failures in care homes. Set alongside our plans for the appointment of a Chief Inspector of Social Care and Support, tougher registration requirements on social care providers and the introduction of a new ratings system, these new measures will strengthen our oversight to help ensure that risks to peoples’ care are identified and acted upon as early as possible.

The new system will be set out in forthcoming legislation and will improve the standards and care given in the care sector.

This is part of wider work to improve standards and quality across the care sector and was first announced in the care and support white paper in July 2012. The Department has progressed a number of further initiatives in the sector to improve quality of care, including a new website bringing together for the first time comparative information about care in local areas, and a Code of Conduct and Minimum Training Standards of care for adult social care workers.

This programme will see a greater standard of care for people in care and will mean a more coordinated system between the NHS and Social care, which will provide people with greater support and choice.

Background information

  1. Further information on the Government’s plans to improve care and support can be found here.

  2. For more information contact the Department of Health press office on 020 7210 5317.


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